The Federal Communications Commission has delayed its decision on AT&T’s deal with Qualcomm, putting a damper on the company’s short-term plans to add spectrum while it waits for a ruling on the T-Mobile merger.
The FCC decided to combine its review of AT&T’s planned $2 billion purchase of spectrum licenses from Qualcomm with its review of the company’s proposed $39 billion merger with T-Mobile. The decision to combine the reviews delays the ruling of the Qualcomm purchase, putting it on the same timetable as the T-Mobile merger.
The FCC claims it combined the reviews because the two purchases are similar. AT&T’s deal with Qualcomm would give the company more spectrum, possibly giving customers better data services as smartphone usage continues to grow. The same reason underlies AT&T’s plan to buy T-Mobile, which was announced earlier this year.
Now, the FCC wants to review both purchases at once to ensure AT&T is not creating a spectrum monopoly, especially in overlapping areas where the company may already have sufficient resources.
“We have concluded that the best way to determine whether either or both of the proposed transactions serve the public interest is to consider them in a coordinated manner at this time,” said the FCC in a letter to AT&T and Qualcomm.
AT&T expected the FCC to come to a decision soon on the Qualcomm purchase, which would have allowed the carrier to add spectrum almost immediately. But the FCC’s move to tie the decision to the T-Mobile merger means the deal won’t see a ruling until the first quarter of next year.
“The FCC should approve the pending AT&T-Qualcomm spectrum sale now because of the clear benefits to the public from the sale that stand on their own and are totally unrelated to the proposed AT&T-T-Mobile merger,” according to Dean Brenner, vice president of government affairs for Qualcomm, in a statement.
While AT&T says it faces slight spectrum crunch now, the problem may be compounded in the future. The carrier claims it will see more mobile traffic in the first seven weeks of 2015 than it did in all of last year. According to analysts, that amount of traffic on AT&T’s present network would lead to extremely slow data and so many dropped calls that the network would barely be functional.
By aligning the timetable for the Qualcomm deal with its T-Mobile merger decision, the FCC’s ruling next year becomes even bigger for AT&T. Depending on the final decision, AT&T could see its future problems solved, or it could have to scramble back to the drawing board.